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Viewpoint: From trash to treasure
Methane, a clean-burning fuel source, also can be an untapped revenue stream for cash-strapped cities and towns, and a jobs generator.
4 Min Read
Municipal landfills hold potential treasure that can benefit the environment and community coffers. The rubbish buried in municipal landfills emits methane, a greenhouse gas that can be captured and used to fuel power plants, manufacturing facilities, homes and more. But methane is more than a clean-burning fuel source. It also can be an untapped revenue stream for cash-strapped cities and towns, and a jobs generator for the local economy.
Municipalities can capitalize on that asset by creating landfill gas-to-energy (LFGE) projects. According to the U.S. Environmental Protection Agency (EPA), there are approximately 2,300 active or recently closed landfills nationwide. About one-quarter of those have operational LFGE systems. More than 500 others are potential candidates to develop LFGE projects, and around 350 of those are in the municipal sector.
Through a survey and interviews with landfill owners in Tennessee, we found municipal officials often do not consider LFGE projects because of perceived obstacles — the landfill does not emit enough methane gas; the quality of the gas is questionable; project financing is not available; it does not make economic sense to own and manage an LFGE project. But, in many cases, such hurdles do not actually exist or can be cleared with assistance. The common assumption about size, for example, is often mistaken. Even landfills with 1 million tons of waste can support small LFGE projects, and provide financial and environmental benefits.
Is your municipal landfill a good LFGE candidate? The EPA’s Landfill Methane Outreach Program (LMOP) defines a candidate landfill as one that is:
accepting waste or has been closed for five years or less;
has at least 1 million tons of waste; and
does not have an operational LFGE project or one under construction.
Becoming educated on the issues seems to be the primary challenge. But that does not mean the decision-makers in interested communities need to become experts. There are project consultants, developers and attorneys who can provide the technical, financial and legal assistance to evaluate whether a municipal landfill is a good candidate for an LFGE project.
Begin by referencing resources, including the EPA’s LMOP website, which includes an up-to-date and comprehensive LFG Energy Project Development Handbook.
Understanding the quality and quantity of a landfill’s gas supply is vital to determining if a municipality should build an LFGE project. A variety of techniques — such as computer modeling, review of landfill records, and site-specific investigations — can more accurately predict LFG supply and quality.
The standard model for financing a project is for a municipality to partner with a gas provider, developer or other end-user who will help defray the costs. Local governments that choose not to partner with a developer may find that financing becomes more complex and can require specialized financing expertise.
Payment to the municipalities can occur in several ways, including:
Royalty payments. The developer builds the facility, owns the gas and pays a royalty to the landfill owner. Developer royalty rates can range from 10 to 30 percent.
Purchase of gas and sharing of income. The developer builds and pays for the new gas collection facility, and either owns or buys the extracted gas from the landfill owner, such as at a fixed or indexed price. The developer and landfill owner also share income received from the sale of the environmental attributes, such as renewable energy credits.
Payments while the project is under development. The developer pays a fixed monthly rental fee or makes certain milestone payments while the project is under development, and prior to beginning commercial operations.
A landfill may seem an unlikely place to find an environmental and economic asset, but that is what it can become as an LFGE project. By thinking creatively and consulting appropriate advisors, officials may find that their community’s methane gas can be part of its treasure.
What do you think? Tell us in the comment box below.
Jeffrey Karp is a partner at Sullivan & Worcester LLP, a full-service law firm with offices in Boston, New York, and Washington, D.C. The firm’s climate practice draws on its environmental, renewable energy, project finance, corporate, and tax practices to offer the legal services necessary to undertake an LFGE project.
Stephen Batiste, P.E., is a solid waste practice leader at Brown and Caldwell with more than 20 years of experience in issues related to solid waste, including landfill planning and design, permitting, landfill gas reuse, and operation and maintenance. Brown and Caldwell is based in Walnut Creek, Calif.
